The Possibility That Landing Is Hard, Not Soft
This chart puts the real estate run-up of recent years in some historical perspective at a time when market news continues to disappoint. (The black line starts at a baseline value of 100 back in 1890 and is inflation-adjusted over time.) Rising inventory, falling building permits, fewer sales. And while homeowners, especially those of us…
This chart puts the real estate run-up of recent years in some historical perspective at a time when market news continues to disappoint. (The black line starts at a baseline value of 100 back in 1890 and is inflation-adjusted over time.) Rising inventory, falling building permits, fewer sales. And while homeowners, especially those of us who purchase in the last two or three years, are watching closely to see the impact on their own financial status, economists are thinking more and more about how a weakening real estate market could impact the broader economy, as lower levels of equity materially and psychologically impacts consumer behavior. The Times lists the three possible outcomes: Soft landing, prolonged slump and full-on crash. Which do you think is most likely?
Reading Between the For-Sale Signs [NY Times]
. Doesn’t that make a home more than just an financial asset?
Yes, but there are plenty of people, developers, ect, involved in now for short term, quick gain. and a lot of people over leveraged who were hoping to sell their condo for tidy profit after paying an interest only mortgage for three years.
I don’t think this sort of mad rush speculation is good for communities or for long term growth.
Eventually I think prices will bounce back, and people who are in for the long haul, barring any disaster, should be okay.
but keep in mind japan’s real estate driven ecnomony took ten years to recover and properties lost 60% of their value – that was more commercial though
anyone know the state of the NY COMMERCIAL market??
Wait a second. If a house which sold for $100,000 in 1890 is now, inflation adjusted, $199,000 — sounds pretty reasonable to me. That is a compounded rate of return of all of 0.5949%. And the population of the US in 1890 was what? 50 million people or so. Lets see — the population went up by 5 times and housing, inflation adjusted, doubled. Is the sky really falling? Or maybe we look at statisics from economists as gospel when they might be just another way to make a point. “Economists use statistics like drunks use lampposts: for support more than for light” Winston Churchill
A graph and chronology of NY Times articles (’81 to ’95) covering the last cycle for those who haven’t visited…
… http://www.youdovoodoo.com
“Most of us only own the house we live in, and this is our home, to live in, enjoy, and raise a family in, not just an asset. Doesn’t that make a home more than just an financial asset?”
To you, yes, but come on, you can’t be so naive as to act like the other 99.9% of the US hasn’t thought just the opposite for the past few years? While you staying in your place for 30 years likely means you won’t be affected, there are many people just the opposite of you.
I was looking at properties in Southern Westchester this weekend…I have a very honest, normal realtor who basically told us nothing is selling, the market has changed, etc. (she also put no pressure on us – kudos to her!) Sellers are cutting prices – not nearly enough yet to sell anything but it’s happening.
No, Chuck has a point. Rising rents are a strong sign of the viability of the NYC housing market and should help ease the sales market landing.
Sales prices won’t crash through the roof because there is still a strong demand for housing in NYC.
Pretty simple, actually.
I don’t pretend to know anything much about real estate as investment, the way the stock market is, but aren’t most homeowners in it for the long haul? Most of us only own the house we live in, and this is our home, to live in, enjoy, and raise a family in, not just an asset. Doesn’t that make a home more than just an financial asset? Most of us don’t trade property like stock, we live in it for at least a number of years. Doesn’t that fact help shield us from the ups and downs of the market? Of course, some people have to/want to buy and sell for various reasons, but doesn’t the majority hold on, thereby making our investments a good thing over time?
Naively wanting to know…….
Westchester was still hit .. not as hard as Rockland, but still hit
I’ll agree with 11:24 that rising rents won’t help housing prices, however it is at the point where it’s more affordable to pay a higher rent then the equivalent housing cost. The 20% down is getting to be quite a bit of money even for those that can afford $2500 a month in rent. Once you factor in the maintenance fee per month plus the upfront costs of buying, high rent may be a better alternative to high housing prices. The only way I think rent will go down is if housing prices literally crash. Otherwise both are going to be relatively high for a while longer.
I was at a barbecue this weekend where someone mentioned the outlying markets have dropped considerably – Jersey, Rockland, and Nassau for example. Westchester supposedly hasn’t been affected as much. Can anyone confirm this?
so 92-95 was tough. that’s 3 years. if that is the big deal, than I’ll sleep easy